Sunday, 26 November 2017

We team up with Syndicate Room The Due Diligence Guide for Investors - out now for free




Well here it is - the new and only guide for investors in the SME market, explaining how best to carry out Due Diligence before you part with your cash. Download it for free here


The guide, written by this blogger and updated on line as new information comes to light, is a very quick but comprehensive help to carrying out DD. If you dont bother with the DD, then you are a fool. And you are not helping anyone. In doing a good job on DD you can help the company you are interested in and that in turn that will be a help to UK plc. The last thing we need is a whole raft of useless companies soaking up the investment offered by ECF. Anyone familiar with this blog will be aware of that!

We have called many of the failures that we now see - when they were pitching for your cash. Read this guide and it will help you do the same. Filled with examples (anon but real cases) it's a quick overview reflecting 35 years of business experience alongside one the UK's best ECF platforms.

Thursday, 16 November 2017

One Rebel raise £4.8m causing Crowdcube investors considerable dilution



One Rebel - a company trying to set up a chain of health and fitness studios, has saved itself in the short term with an injection £4.8m of equity capital. At a valuation of around £11m, this round is well below the Crowdcube valuation from 2015. 


One Rebel has taken £4.5m off Crowdcube investors to date in two separate rounds, in 2014 and 2015. They have never come close to any of their projections or planned openings. 

Apart from this being a down round, the dilution that Crowdcube shareholders will endure will not be much of a Christmas Gift.

This sector has been swimming in cash recently with Piper backing the Frame studios (2 currently) with £6m. 

Yet another Crowdcube success blows up



Universal Fuels took £50k off Crowdcube investors in 2012. Now it has gone into Administration owing creditors over £600k with little hope of paying any of it off.


We just tell the facts - we dont make them up. 

This company, which we warned investors about during their pitch in 2012, has run up large debts. It may not have taken much off the 2012 investors but it has off trade creditors. 

When the administrator looked into selling off the company assets, they found the company in a bit of mess, with worthless contaminated oil and false debtor lists.

So as we have been saying all along, Crowdcube are, by helping this type of outfit fund, helping to ruin UKplc. How many other companies will be forced into administration because of these bad debts and how many laid off staff will suffer depression and soak up NHS funds, we may never know.

One thing we all know, Crowdcube are responsible despite their lawyer's claim that nothing is their fault. Without Crowdcube and the fake financials their platform promotes, this company would not have been able to rip off £600k worth of creditors. 

Wednesday, 15 November 2017

Rentify finally file accounts showing they are blushed with 'success'


Rentify helped themselves to £1.3m on Crowdcube, at a valuation of around £20m, last year. Their latest accounts to YE DEC16, filed late, have them technically insolvent with a large hole where projected further investment was promised.


We read recently that this blog is primarily for bashing Crowdcube. Well that only tells part of the story. All we do is follow the pitches that fund on Crowdcube - the news here is only 'bashing' because those are the real results these companies are producing. Unlike some others, we dont manipulate the numbers.

Back to Rentify. They made a £2m loss for the year, which is in fact better than the projected £3m loss. However the problem starts when you look at their funding. The £6m of new equity investments shown as coming in 2016 has not appeared and the company has so far in 2017 managed to raise not a penny.

We have warned about this type of thing on numerous occasions. Promises of future large funding events are more often than not a smoke screen for something well worth avoiding. The future of any business is entirely reliant on its liquidity. Rentify dont have any. The company has lost 4 of its Directors this year - another big red sign to stay away. One of them was Simon Grice who founded Ineed - another failed Crowdcube company.

Rentify is backed by Balderton Capital, one of Crowdcube's main backers. Any patterns appearing? Maybe they will shake their money tree once again.




Crowdcube's handling of Ethos Global Fiasco is a disgrace



Crowdcube have hung their Ethos Global investors out to dry with a deal that benefits nobody apart from the founders.


Crowdcube investors put over £700k into Ethos Global - a Cambridge based yoga studio. Now Ethos is being liquidated, the founders have come up with a cunning plan. They set up Soma London England, to run the new London studio. This new studio was paid for and opened by Ethos. The liquidator has yet to rule on this sleight of hand but Crowdcube seem to have accepted it. Ethos owed over £7m, around £6m of which was shareholder capital. Their only assets were in London.

In the original CC pitch, Ethos sold 15% for the £700k, valuing itself at around £4m pre money. Now shareholders have been offered a take it or leave it deal by Crowdcube and Ethos - shares in Soma to replace those of the liquidated Ethos company. The deal is only open for a short time to pressure investors. They are offering 7% of Soma, a company with little trading history, no accounts, no capital and a potential court case hanging over it's founders, in place of the 15% they owned in Ethos. So Crowdcube have agreed with the founders that Soma is worth over £8m. Sure.

The deal is, you either accept this total nonsense or you get nothing. Meanwhile the founders walk off with the assets paid for by Crowdcube investors. As the shares are held in a Crowdcube nominee account - they owe a duty of care to act on behalf of their clients - the investors. Well the investors are not paying them anything but are Soma?

In the email from Dr Theo, one of the founders, he talks glibly of raising £200k in the next few days and then raising VC money next year. What is he smoking? Why would any sane investor give him a penny?

We would be amazed if the founders are not handed out a banning order by HMRC and also bemused if something isn't done by the FCA about Crowdcube's part in all of this. The reason that Ethos failed was because their Cambridge landlord was owed a large sum by the company and put them into liquidation. A sum that at least in part we estimate, dated back to before the Crowdcube pitch but which was not revealed to investors in the pitch. Essentially the company never had a pray.

Hung out to dry with brass knobs on.

Tuesday, 14 November 2017

Has Crowdcube's Oval Sound gone pear shaped?


Oval Sound were on Crowdcube trying to raise £500k. The campaign is (was) a disaster with only £5k invested (a CC term)  and has now vanished, with 16 days on the clock.

See here - https://www.off3r.com/deal/1139-oval-sound-crowdcube



This may or may not have something to do with the fact that Oval raised a whole load cash on Kickstarter and have yet to deliver anything to most of its supporters. The KS page makes for interesting reading. Here is one from 3 November - excuse the language!

Bunch of thieves can’t even deliver after two years their promise useless company and crowd founding again your having a fxxcking laugh hope it flops and that you end up bankrupt useless useless

Whatever, the Crowdcube campaign is now in private mode, although its not private due to some glitch within the CC system.

I suppose with the laughable attempts to sort out Brexit, we shouldnt really be surprised that we get ourselves in such muddles. This is yet another Crowdcube farce. A transparent one. 

Twenty Something London appears to be nothing



Twenty Somthing London raised £156k on Crowdcube two years ago. A donkey in a boat would have been a better bet.


It's timely that just as we launch our DD guide with Syndicate Room here, yet another Crowdcube disaster is sinking or is sunk. 

TSL have failed to file accounts due in June 17 and are now 2 months into a compulsory strike off - hell they cant even close in an orderly fashion. 

They are one in a growing number of late filers but we feel given the inaction to stop the GAZ1, the lack of any filings for 12 months and a FB page with no posts for over a year, this one is a goner. 

Question is, can donkeys swim?

Crowdcube Success Doorsteps are totally clueless

There is something very odd about the recent raise by Doorsteps - the online estate agent run by a teenager.

Firstly, when the pitch was live, the founders made a big deal of a potential very large investor coming on board. Such was the importance and likelihood of this, that the platform allowed the pitch, which was already over funded to 140%, to extend its campaign.

So the original target was £400k. The pitch got to over £550k and then the extension opened. 

If you check the pitch on Crowdcube, they finished at £395k. 

So under the original £400k and well off the £550k plus they appeared to have hit. Where was the large investor? Fictional? What happened to the extra £150k? And what happened to the rule that if you dont get to your total, you get nout?

This was all happening back in August 2017.

Now on the 14 November, the filings show little or no evidence that Doorsteps or Upside Capital Ltd, has raised much at all.

A SH01 filing dated 6 November, states that the company allotted 495 shares for £1 each. IE they gained £495 in cash from investors. It also states that the total allotted at this date (6 Nov 2017) is 12m. There is only one class and they are A shares. So CC shareholders bought 0.0000412% of the company for £495. That certainly isnt the deal Crowdcube are promoting.

You may remember we had the same problem with Vita Mojo recently - see here. How many more filings have been hopelessly misfiled by Crowdcube since 2011??

There is more.

The company's filed Confirmation statement made to June 7 2017, shows the total allotted shares as 100. So how it became 12m only a few months later with no new filings in between is a mystery.

Obviously all of these filings are total make believe. But they need correcting or CC shareholders who thought they were buying real shares in Doorsteps will end up with dust. It's evident that Crowdcube interns 'helped' Doorsteps create this fantasy. 

It really is not difficult to get all of this right. But it does seem it is beyond Crowdcube. And what does it say about a company's abilities that they cant get something as simple as a filing correct. 

Friday, 10 November 2017

Red Advertising aka Recruitive Software file yet more heavy losses


The Old Dog and Crowdcube legend, Red Advertising, has filed accounts to YE May 2017 with another heavy loss of £300k - giving it a running loss total of £2.3m. 


You have to applaud the sheer determination of the founder but still wonder whether investors would not rather wipe the slate the clean and get on with claiming their loss relief. Their Crowdcube projections had them making over £2m and that was last year. 

Red have raised capital on Crowdcube numerous times, each time with tales of greatness and forbidden fruits. Yet they still keep filing losses. They have been technically insolvent for around a year and even the latest small raise in July wont change that. In their 5 years, they have covered this blog with numerous entries, seen a few name changes, oiled a steadily revolving Directors' door and held a plethora of Crowdcube Awards. 

They started with Crowdcube in 2012 and completed their 4th success in 2014, totalling around £1m. Since then even Crowdcube punters have lost interest and they have sought funding overseas. 

Who knows, they might even make it. It would certainly be one worth writing up if they do. 

Our call back in 2012 was stay clear.   

Wednesday, 8 November 2017

Ethos Global Liquidation is as much of mess as Ethos itself


Liquidators in Ethos Global pile up seem to be out of their depth. Crowdcube shareholders have been left out of pocket with the lights off.


Ethos Global is one Crowdcube's worst scandals. Around £800k was invested via the platform, spent by the company before the company was closed down via a compulsory liquidation. The money spent went to open a new facility which is now run by the same people under a new name.

Documents we have seen state that Ethos has a called and paid share capital of  £6,885,526 and had overall liabilities of £7,864,430. These are from the official receivers office. 

We cant find any documents to support this level of equity invested in the business. Including the Crowdcube fiasco, we estimate that no more than £3m was invested into the company's share capital. And to be frank we doubt the documents filed by the company have any veracity.

In the same documents, it states that the Ethos' founders had given a figure of £50k for the company assets. Now given that most of the £800k Crowdcube cash went into opening a new yoga centre in London, this seems very small. Of course we all know that the founder has moved ownership of this new club to his newco Soma London England. A move that by itself should be earning him some jail time. 

What is yet to be fully explained is why Crowdcube allowed this company, who were already in dispute with their Cambridge studio landlords before the Crowdcube campaign, to get anywhere near to investors. Cambridge, billed in the pitch as the cash cow for the business, closed shortly after the Crowdcube campaign succeeded. 

And guess who pulled the plug on the company. Yup  - the Cambridge studio landlords took this to court and had the company closed down. 

The founders have promised Crowdcube shareholders new shares in Soma, now the operating name given to the London studio. But nothing has happened. Shareholders we have spoken to have had no advice from Crowdcube or the company and have come to us for help. The liquidator has been on the case since July and has achieved nothing.

That is simply wrong. 

Crowdcube interns do their best to screw up new Monzo investment round


Just as we thought that the Crowdcube interns couldnt get any worse - we have seen evidence that they have (in the words of a Monzo employee) - 

'Crowdcube were incorrectly calculating allocations which should now be fixed — for anyone who receives an invite from now on. For those who already received them, you should receive a correction email. Sorry!'


Reading the string, its clear that shareholders had already worked out that Crowdcube cannot do the math  - and they were right.This shouldnt be a complicated piece of arithmetic for a platform sanctioned by the FCA to do exactly this sort of calculation. But guess it is too complicated for Crowdcube. What a  bunch.

Also in this string on the Monzo site, Monzo intimate that they are about to find a way to sideline Crowdcube and do a Brewdog 'raise your own' in 2018. Cant say I blame them. Dilution for those not taking up their allocation now is suggested at 24.5%. 

Friday, 3 November 2017

It is time for real people power to make a difference. Get in touch with us if you have a story about Crowdcube


We cant ignore this any longer. The latest 'mistake' by a Crowdcube success when they gave SHs only a tenth of the shares they had bought; signals time for action. Things must change.


As we wrote in a recent post on Vita Mojo, the company had filed its SH01 using completely fictitious numbers and giving Crowdcube shareholders a fraction of the shares they had paid for. No one had spotted this error until we did.

That has to be wrong.

Why were Crowdcube not checking these things - the company has filed several incorrect documents at CH. 

So if you are an investor or someone who has a story about Crowdcube  - good or bad - then please get in touch. We know from comments on the blog that Crowdcube's own staff are unbelieving in the company's incompetence. Its time to get this all out there - to stop the mass of fake PR they continue to promote and to show them up for what they are. Maybe it will help them change? 

We will verify the facts and you will remain anon if you wish to be. All allegations will be put to Crowdcube before publishing.

We look forward to hearing from you. 


Thursday, 2 November 2017

Is Lickalix melting?


Licklix raised £235k on Crowdcube in 2015. Accounts for YE January 2017 show zero cash and large losses. Crowdcube projections showed £1.2m revenues and £280k NP


It looks like yet another example of Crowdcube's highly exaggerated projections and a business plan fit only for the bin. They havent closed yet which is a surprise given the CA position in January, so maybe they have turned it around.  
















More real evidence that the Crowdcube platform does not work



It's like we have been saying - Crowdcube pitches are worth sh1t. Atlantic Kitchen have a current year revenue of £85k - 3 whole years after raising finance on Crowdcube with revenues in 2014 of £180k.


Atlantic Kitchen is nothing more than a bored housewife's hobby business. We told you all this on several occasions on this blog.

Now the owner and her husband are off to spend sometime in the US - to help expand his business. What the hell happened to the seaweed?

It's risible that we allow this sort of nonsense to even pitch on a ECF platform let alone persuade punters with fictional figures. The revenue for 2017 was supposed to be just under £1m and instead it's £85k. A corner shop selling ice creams on Sundays only takes in more than that.

The cherry on the cake is the delisting from Sainsburys and Ocado - where the former's buyer thought that seaweed hadnt quite found its market yet.

As one angry investor put it - 

I'd like some of these guys to pull their fingers out and wind up so I can put them in this years tax filing and stop getting their yearly updates...

Amen to that.



Wednesday, 1 November 2017

Crowdcube success Ongallery needs switching Off



Ongallery raised £320k on Crowdcube in January 2016. Their latest accounts for YE February 2017 show they are insolvent. So where is the cash?


For a small company, £320,000 is a good sum a money to play with. You would expect to see something on the balance sheet to reflect its going. Sadly in this instance Crowdcube shareholders in Ongallery can see nothing.

We did warn you all when the pitch was live -

 http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=+ongallery

Fixed assets of £23k are lower than 2016 and current assets at £67k are no way sufficient to cover the current liabilities of £146k. Hence the red hue.

So in just over 12 months, the owner of Ongallery has managed to get through all of the Crowdcube money and some more besides. Apparently they have raised over £600k in equity funding. As the accounts are micros its not possible to verify the pitch claims.

Sir John Hegarty, the big name who lent himself to the Crowdcube campaign, has resigned. Their website is still live which is something positive  - but that was created before the money came in.

The Crowdcube pitch is full of the usual krap about how they will drive significant EBITDA etc etc. You need a licence to drive but unfortunately any idiot can start a business.

Apparently the CEO had extensive experience in start ups so maybe with this one, he was just unlucky. We'd still like to know where the cash is.

Pull the switch when you leave.


Tuesday, 31 October 2017

Vita Mojo admits to 'clerical errors' with Companies House - wink wink say no more.



This one is a cracker. Vita Mojo tried to silence this blog with threats of legal action after we showed how their filings at CH were incorrect, along with the stated numbers in their Crowdcube pitch for the year before they funded in 2017.



As requested a couple of days ago by Vita Mojo, we removed the offending paragraphs whilst we gave them time to check their facts. They have now responded - 

Dear Rob,
It appears there may have been a clerical error in the recent filing which is being corrected. In relation to your previous comments:
The accounts presented at the time of the crowdfunding raise were draft accounts and communicated as such - we filed our accounts in accordance with GAAP, and they were signed off by our independent accountants. Any detail beyond this and what is posted on Companies House is not for the public domain. 
We ask that you refrain from further slander and defamatory commentary. Failing that, you’ll be hearing from our lawyers.
Regards,
Emilien

Firstly the accounts for YE Dec2016 are unaudited and not signed off by any accounting firm. Secondly GAAP is a acronym that has little meaning and certainly has no place here. Thirdly none of this is or ever was slander - it is as we explained to you in the first instance, all factual. You have now agreed this. Thanks

We had pointed out several problems with the filings going back over the last two years. They have not addressed these here. 

The accounts that they produced on Crowdcube as 'prior year' were not the filed accounts, as we all know. Had they been, then one hopes there would have been no discrepancy.  But they declared them to be the real numbers for the past 12 months - which by the time they were on Crowdcube, had already been finished for 5 months. They were happy, as were Crowdcube, to use these numbers tagged 'prior period' for the purpose of selling equity for cash to the general public on the FCA regulated, Crowdcube platform.  The difference between a £1m loss as described on Crowdcube and the real £1.5m loss as filed, we would claim is material. Even if it's a another clerical error, it doesnt reflect well on the management. Actually it is completely hopeless. How can you not know about another £500k in losses 5 months after the year end?

Talking of clerical errors and management, they seem to have a few problems in that area. On 10th May 2017, the company split its shares by a factor of 10 - SH02  filed at CH. However they then failed to reflect this in any of the subsequent share dealings - including the one that involved a £3.2m investment via Crowdcube. Take a look at the filings - it's all there in black and white. Why SHs have not picked up on this is a surprise. 

What this means is the clerical error has given Crowdcube shareholders their proportion of the company under the pre split conditions - a fraction of the holding they paid for . So for an easy example say company A had 100 shares and sold 20% of its business for another 25 shares - total 125 shares of which new owners hold 25 or 20%. However if ,as we have seen with Vita Mojo, they had split the original shares by a factor of 10 but failed to allow for this/failed to file it correctly or simply just failed, new owners would be sitting with 25 shares out of total holding of 1025 or around 2.5%. OOPPS! Some clerical error by Jove.

Apart from this clerical mishap, we cannot find in these filings this £3.2m - we can only find around £1.8m. But hey, it's probably just another error of the clerical variety. If I was a new SH, Id sure want my holding checked. 

They have never thanked us for helping them avoid a very embarrassing mess had these clerical errors not been pointed out to them. No manners. 

Actually the underling who was sent forth to tackle us, armed only with legal phrases such 'cease and desist', suggested as his first gambit that we didnt know how to read accounts. BIG mistake. HUGE. His genius idea was that we had somehow mixed up cash flow with the balance sheet - oh dear. 

When you learn that he was previously the intern in charge of the offerings at Crowdcube, it all makes perfect sense! A perfect circle.

It is all highly embarrassing for the management of Vita Mojo, their backers if they didnt pull out and for Crowdcube. Of course for Crowdcube this is the norm, although at £3.2m this was a substantial raise for them. It reflects very poorly on the skill sets that our SME businesses have and on our education system. It is a lose lose and we need to do something about it. 




Zovolt are Crowdcube's first massive success story!!!


Zovolt raised money on Crowdcube in 2013. Since then they appear to have teamed up with Irish company Streembit and have just announced a £4.8m profit for YE Jan 2017. Lucky shareholders will be keen to cash in.


Zovolt makes a heart rate monitor which can be linked to mobile devices. Well that is what it claimed in its Crowdcube pitch. We couldnt find this product.

On their website they say they produce a thing called Streembit - which aims to implement a secure peer to peer comms system. Streembit turns out to be a different Irish registered company, Streembit Ltd which shares the Zovolt website. Did it takeover Zovolt? Streembit has been going for just 12 months and has the same director as Zovolt. 

Now the interesting bit.

To get the balance sheet to balance it appears Zovolt, run by Mr TZ Pardi, has grown the company's intangible assets from all but zero in the Crowdcube pitch to over £5m. As a shareholder you might want to know what these assets are? One problem here is that despite these extraordinary numbers, the company is still filing micro accounts with no notes and virtually no entries. Intangibles shot up from £390k to £5.1m in the 12 month period. Profits from £64,000 to £4.8m. That's a phenomenon.

As Zovolt has a balance sheet value of over £5m it must adhere to the other 2 criteria that allow it to file micro accounts as per the CH rules. One of these is that it employs fewer than 10 people and the other is that its turnover is less than £632,000. Now we may be wrong but how is it possible to generate profits of £4.8m with a turnover of less than £632k? Have Zolvolt managed to lay golden eggs for free? 

In August 2016 they raised more money by issuing new shares. But this event is not included in the YE Jan 2017 accounts, where the called up share capital remains rigidly the same as the previous year. 

Zovolt was valued at around £500k in 2013 but with net profits of at least £4.8m (ignoring any dividend) in the last year, they must be worth well over £50m now - a ROI for SHs of 100 times.

Odd thing is that Crowdcube, who are never shy when it comes to deafening everyone with their PR horn section, have remained totally silent. Nothing. That silence says a lot. 

Do you think that means their client Zovolt might have got their accounts wrong? If so have they ever managed to get them right and why would Crowdcube promote a client who cant file basic accounts. Surely not even Crowdcube could be that hopeless?

Any clues please get in touch. 


Sunday, 29 October 2017

Shaw Academy's Crowdcube pitch illustrates rewards based Crowdfunding at its best




Shaw has raised over £2m from almost 1500 punters on Crowdcube. Well with a lifetime membership of free courses for just a £1k is it really surprising?


If you wanted to take a complete course with SA say in marketing, they give you the first month for free, then charge you £45 for the each of the next three segments - giving you a completion and a certificate. The freebie is just a one off introduction promotion.

So if you wanted to take say 6 of their courses over the next 5 years, you would have to pay around £1600 (assuming each course is made up 4 modules). We havent taken a course but assume if you dont complete the modules then it's a waste of time. Their marketing course should teach that ploy. 

So to the rewards. 

For a £1000 investment you get free access to all the courses - forever. Plus you get some shares at a valuation of £86m. Seems that Company Valuations is not one of their courses. But who cares. 

With more than 4m courses delivered, the company has a great following. Expect this one to make it way past £2m. It isnt really equity crowdfunding, they are just pre selling their product. They must know that the average punter doesnt take 6 or more courses and as everything is remote, they are not about to sell out. That should also be in the marketing course.

One thing that has to be considered here is that the free courses for life rely on the company remaining in business. Get those courses booked for 2018 just in case.


Saturday, 28 October 2017

Does Equity Crowdfunding encourage Phoenixes?



Quantock Brewery raised money on Crowdcube and went bust - no surprises there. But now they have simply renamed themselves Somerset Ales, off loaded those tiresome shareholders, and are in business again, with cut price assets.


It is all a little too easy these days to create a business, fund it via some make believe projections for the mugs on Crowdcube, go bust, ditch the mugs and start again using the assets bought at a snip from the old Co. In fact the administrator positively encourages it, as it allows him to complete his main role - gain the best outcome for the creditors.

Do we need to look again at how the insolvency laws seem to encourage this type of transaction before it becomes the norm? It is not currently illegal to do any of this.

Seedrs follow Crowdcube in using completely misleading numbers



It is like something out of a kindergarten, not a serious business venture. Equity Crowdfunding platforms Crowdcube and Seedrs have set a new low in their levels of PRing - completely misleading unsuspecting punters. 


First there was Crowdcube's claim of businesses having raised £X off their platform. The X turned out to be the total pledged into all deals, not the total invested. It included all the deals that never completed so never received any investment. So its bit like a company being asked what its revenue figure is and adding in all the enquiries that they quoted on, that never became orders and then revenue.

Hey, maybe thats what they do! That would certainly explain the massive gap between projections and reality.

Now Seedrs have done the same. Their latest PRing announces in a very bold heading that they have had £40m plus invested into campaigns. Somewhere below this, they give you the real figure for money actually invested via the site - £24.9m. You get the idea. FCA nowhere to be seen.

Anyone familiar with Seedrs and Crowdcube will probably have worked this out for themselves but punters new to ECF and the platforms will be deceived. That is why they do it - to deceive, to make it look like they are doing more business than they are. An investment is by definition an act which has completed not one that falls through before any money changes hands.

Whats more ECF has grown on the back of its image of being open and honest. An image which if its not entirely blackened, would have taken on a darker hue with this development.

The one good thing you could say for Seedrs is that they at least gave the real figure, whereas Crowdcube just pretended their fake one was real - as you would expect we wrote about it on here.

Look, if you cant trust a platform's own PR, then why would you trust anything they claim to have vetted?

Time to grow up guys.

Friday, 27 October 2017

Vita's Mojo melts away



Vita Mojo raised £3.2m on Crowdcube in May 2017; apparently. Actually it was one of Crowdcube's usual fudges, as £1m was already in the bag from a corporate investor. At the time Vita Mojo had three outlets. They promised to open another 2 in 2017 plus their first licensee unit.

Well here we are in October 2017, just 5 months later. And Vita Mojo has just two restaurants - one lost along the way and it seems no new openings. We couldnt find any licensee units out there. The opening line in the 2017 Crowdcube pitch is -

''Vita Mojo is a fast growing restaurant chain......''

Snails are fast. And if you can catch them, taste delicious.

We wrote about them when the pitch was live here

PLEASE NOTE THAT A SECTION OF THIS POST HAS BEEN REMOVED AT VITA MOJO'S REQUEST WHILST WE VERIFY THE FACTS AS REPORTED. 

Checking the filings at CH, it is hard to find this £3.2m that Crowdcube claim they raised for the company. For the whole of 2017 to date, we could only find around £1.8m of new equity funding.

When you have been following CC for this long this doesnt come as any surprise. Accounts and Confirmation will clear up the mess when they come out soon.

NEWS FLASH - Yorkshire balls on a sticky wicket leads to total collapse.



Yorkshire Meatball Company, another Crowdcube success, fails to impress and closes.

There's nought like a meatball from Yorkshire. A statement which recently became true when the YMC decided to close down - taking all of the Crowdcube investor's cash with it. Oh well, we have heard it all before.

We had been expecting this given its restaurant closure and lack of accounts. When they raised on CC they had another version of the same thing in liquidation - we wrote about it here  - the warning signs were there all of the time. Thanks to the Grocer for this piece - 


Crowdcube's FCA regulated platform promoted the pitch with this  - 

We’ve also received interest for a potential international franchise, and a leading snack food producer has approached us with a view to working with our brand and flavours.

And talked about the success of the company's two restaurants. Like hell. 

The liquidators stated - 

“The company’s financial difficulties arose from a culmination of the historic losses from its restaurant operations and insufficient working capital to promote its products to a wider audience.”

This hardly seems to fit with the Crowdcube version but then they never do. Crowdcube never mentioned the liquidated subsidiary in the pitch.

When will people wake up. What you are being told on the Crowdcube site hardly ever turns out to be true. Do your own research or lose your money on the horses.

Monday, 23 October 2017

Monetaflex has gone - Long Live EarlyAce. A common tale from the Crowdcube.


In more shenanigans on the Crowdcube platform, ex Crowdcube success Monetflex director Simbarashe Chiguma, has set up a newco doing the same thing - EarlyAce. 


Chiguma, a co founder, resigned from Monetaflex last year, just 12 months after the Crowdcube campaign. The company raised £160k on Crowdcube for the business which was an online platform for the sale of invoice credit. We wrote about them here. They recently decided to close with the loss of all investors cash.

In the video that they used to take money off Crowdcube investors, they had all sorts of successful businesses using their services and an 'investor' who was purported to be a highly successful individual. This all  looks a little odd now.

Since incorporating EarlyAce in November 2016, the month he resigned from Monetaflex, Chiguma has been busy raising funding - 4 small tranches which give him around £200k to play with. Lets  hope he does better this time. 

Thanks to our reader for the heads up. 

Friday, 20 October 2017

Are Crowdcube success Atlantic Seaweeds sinking?



We had hoped to bring you good news - but there isnt any. Atlantic Seaweeds took £125k off Crowdcube punters in 2014. Although they are still open, the accounts are not a pretty sight.


We should be looking at profits of over £100k by now according to the Crowdcube pitch - you know, it's the usual story. Accounts show the company as insolvent with little activity, no new money and from what we can see, a difficult future. The year does seem to have produced no further losses but this may just be because it didnt do much. Some new money must have appeared from somewhere to pay of the current creditors.

Nothing new on the blog since January 17.

A bit of a mystery but then that's seaweed for you.

Filmore and Union raise £3.5m from The Business Growth Fund.


Filmore and Union - a northern based chain of health food cafes - has raised a new £3.5m from BGF at what we think is a valuation of just over £6m. It raised over £800k in 2015 on Crowdcube at a valuation of around £5m.


Their accounts are due out in December so we will have to wait and see how they compare to the Crowdcube projections - last year's missed by someway. Revenues for 2017 do seem to be roughly in line with what they stated. The company has certainly been active since taking the Crowdcube money. It has opened 7 new sites, doubling its size and done a deal with John Lewis in Leeds. This might explain the need for cash.

Whilst selling what appears to be around 40% of their company to BGF is in many ways a coup for the company, it is not all good news for Crowdcube shareholders. Firstly they are diluted and secondly this raise was never part of the 2015 plans.  It does ensure the near future however and as we are likely to see some rocky trading for consumer facing outfits in the next 3 years, this can be no bad thing in terms of the business surviving.

BGF have deep pockets. It's too early to see if they are good at picking winners though. They have invested £1.2bn to date in UK start ups and early growth companies. It does not simply invest, it helps the companies grow and can provide further funding - a model we applaud and one that we would hope equity crowdfunding could eventually learn from. So for example instead of making a commission on the raise and then moving on to the next campaign, as happens now, platforms would take more skin in the game and be mentoring these companies. It is a whole different mind set and Crowdcube couldn't manage it. But is there a platform that could?  We think so. 

Thursday, 19 October 2017

Crowdcube's Shamba Technology has no news, no money and no assets.



Shamba Technologies raised £112k on Crowdcube in 2014. From the accounts most of this is now spent and the company has no fixed assets.

It is quite literally an extraordinary business. Its balance sheet suggests it is dormant and has been for some time. The website news section has had no news for over 12 months.

Yet it won a Siemens award in 2016 - small but still an award.

It was supposed to help get electricity to the poor in Africa, using a combination of small time solar powered units and their IOsolar system, which being modular, allowed it to be built in stages as and when it could be afforded. To be fair it is not a bad idea and its for a great cause.

We have no idea what has gone wrong. It was,according to Crowdcube, to be making around £1m profit in 2016 and almost £2m in 2017. In fact it made a small loss on negligible trading. A £400k loan was supposed to be in place for 2016 according to Crowdcube but this has not appeared. The turnover was projected to go from £40k to £1.7m in the twelve months post funding. Clearly that didnt happen either.

We hate to say it but we have been telling you for years that the kind of businesses Crowdcube supports will, in the round, go nowhere.

Wednesday, 18 October 2017

Pavegen fails to light the world with kinetic energy.



Pavegen raised £1.9m on Crowdcube in 2015. Their power generating footfall slabs are excellent at creating PR if little else. Is it just a vanity project for their star actor, CEO and Tom Hiddlestone look a like, Kemball-Cook? 


This is one we saw coming - we are not there yet but shouldnt take much longer. 

Pavegen claims be part of the solution for one of  the world's most pressing crises - energy use.

It was sold on Crowdcube in 2015 as an energy alternative. Or you could say it was over sold.

So to date the tiles have been used in some very high profile locations but as promotions not power generators. The Pavegen team all sing in tune off the same sheet and it sounds great. They are as slick as Hiddlestone's suits and not shy of comparing themselves to Tesla. The product is of the now but does it really help anything?

If you can stand it, watch this Apple launch style video -  http://www.pavegen.com/livestream/ and you will get some idea of the paf. The CEO says as at one stage 'So what do we call this'. We have our own idea. In this display, given to an audience of investors and hangers on, the CEO very proudly announces the first full time commercial installation - a major break through for the company. No ifs, no buts, no maybes. The venue is to be the Westfield Shopping Centre at the old Olympic Park Stratford City, we are told. He goes on about this being one of busiest sites in the world, which it may well be. The problem really is that this installation never took place. Despite the exciting announcement Pavegen never installed a single tile.  It was all nonsense. 

As an investor, we'd be worried about a few other things.

Firstly getting the price down to their stated level - the same price as standard flooring is never going to happen unless we have a critical global flooring shortage. The company has made some headway - the last figures we could find suggested £600 psm. So a long way to go.

The second issue is the power each step generates. Pavegen claim that the new triangular version which can generate off all three corners, produces 200 times more power than its original. That's fine at 5watts per step but it just means the original was nonsense. Can it get better? Well that is the billion dollar Q.

This level of power generation isnt really going to solve anything - its more of a gimmick for PR stunts; which is precisely how it has been used to date. Whats more, watching people walk over a section of them makes you wonder how long it would be before the lawyers would be involved over elderly sprained ankles or worse. The 5mm downward and back up movement cannot be comfortable. 

In any high footfall situation you also have to wonder what happens when litter, grit and general dirt gets down the gaps between tiles and if someone is already on one side but leaving and another person is just treading down - how do the tiles/people respond? None of this has been trialled as they have no high footfall sites that are in long term operation - despite the announcement. Used on pavements, we may find people walking on the roads.

The one thing that Pavegen should be applauded for in all of this is their ability to get people to focus on the crisis. Alternative power is the solution but just not this hype. 

And we almost forgot its new use - as a customer data collection tool. Im sorry but this has to be one of the most expensive ways to collect footfall data ever invented.  

Finally  - the one thing Pavegen have a proven record of, is the generation of large losses when they claimed they would be making large profits. Filed accounts show losses of £1.5m against Crowdcube's figure of a £280k profit for 2016. Dilution a go go; all the usual Crowdcube features apply. 

Mind the gap in more ways than one. 




Scaramouche and Fandango way off Crowdcube targets.



S&F or Galileo Group Ltd, have just filed accounts for YE Dec2016. According to the first HY update for 2016, they were on track for a record year. So what went so wrong?


The HY report that we have seen states that the company is on track to break through its Crowdcube 2016 revenue projection of £2.2m and is aiming for £2.8m. You have to dig a little to get the real figures for Galileo - the word Group in the title does not refer to the accounts. We have found a YE revenue of £2.15m between the Group and Galileo Products. So not close to the anticipated £2.8m. The Crowdcube projected profit of £658k on a £2.2m revenue, is filed as an overall profit of just £60k.

At the end of 2016, Galileo 'bought' the industry leader, Watermark Ltd. Actually they gave them 230k new issue Galileo shares and around £200k for the deal. Watermark had been making losses since 2000 and was technically insolvent by 2016. Restructuring, including a capital injection of over £6m, in 2007 enabled a small profit for two years but then it was back to heavy losses. Formed back in the 1980's to service the then growing corporate gadget market, Watermark had made substantial annual profits and paid juicy dividends. But expansion into the travel accessories market seems to have brought with it problems that were insurmountable. What is the point in having to service low margin contracts (Watermark's own description of its core problem), just to have a multi million pound turnover? If there is a message there it might be -  Drive for show putt for dough. As we keep on pointing out deals with he big boys at low margins are not really for small turnover companies - the impact on the cash and profit line is too severe.

Why the purchase of Watermark took place isn't exactly clear but may become so with another year's accounts. Watermark's 2016 revenues were $14m, down almost $4m on 2015. So there maybe synergies that will give Galileo the leg up it needs and of course a short term windfall may come from the fall in the £/$. Unless of course they bought forward in anticipation of a remain vote, as any sensible business with manufacturing and sales both in dollars would have done. It does give them instant access to some interesting overseas (HK for one) markets and alternative accounting centres.  

Issuing another 230k shares will dilute Crowdcube shareholders as it represents a 20% increase in the issued share capital. But they will be used to that.




A total turnover of only £2.15m for a company claiming to have deals with most the UKs top retailers and some of the world's top airlines seems to be very low to us. Are they giving the stuff away?

It is hard to reconcile such an upbeat shareholder report in 2016 and the accounts filed for the year.  Galileo posted a small overall profit of £60k for 2016, against a £650k projected NP. But more importantly it took out a £250k loan in the year; filed as coming from its shareholders. New updates have apparently not been forthcoming.

Tuesday, 17 October 2017

Please let us help you Crowdfund - you are making so many easily avoided mistakes


Looking at the Crowdcube platform recently, it is obvious many of the pitches have little clue what they are doing. We can help you - for free.


So many of Crowdcube's recent pitches have failed to get even close to 50% completed. 

ECF Solutions, our ECF consultancy, could help you avoid the heartache and waste of time that this involves. You either need to revamp your pitch, look at another platform or choose a totally different route for your financing. 

We will look over your business and your pitch and help you place it on the best possible platform, at the best value to achieve the capital raise you require and in the best possible shape to be a success.

We can do this effectively because - 

- We are totally independent.

- We have 30 years experience in creating SMEs

- We have reviewed over 2,000 ECF pitches

- We have been involved in ECF since 2011, are recognised by the FCA as a genuinely independent information source, work for various platforms on a contract basis and have this blog which is read by around 1000 people a week - many if them investors.

- We have called many of the failures on Crowdcube, before they happened and continue to do so.

Our initial service is free. If we believe that your business is suited to this type of funding, we will then charge you a small upfront fee to put together your campaign and help you through it. If it is not, then we tell you that and try to advise on other avenues.

When you are successful, we then take a prearranged percentage as a fee - so the impact on your cashflow is zero. 

With our help, Crowdcube could have a much higher success rate and far fewer very sad looking campaigns at 10% or 20% completed, by the time they end. It's bad for moral and it's bad for business to fail.

Email us now on info@ecfsolutions.co.uk to have a chat.

Some of the articles featuring us - 

https://www.thetimes.co.uk/article/lone-researcher-spells-out-the-dangers-of-following-the-crowd-jw990k2b5

https://www.bloomberg.com/news/articles/2016-11-07/you-too-can-invest-in-a-startup-likely-to-go-bust

http://www.bikebiz.com/news/read/what-the-hell-happened-at-vulpine/021275

http://www.telegraph.co.uk/finance/businessclub/9251891/Peer-to-peer-website-accused-of-misleading-investors.html

https://ftalphaville.ft.com/2016/04/08/2158704/investors-dont-like-your-company-try-crowdfunding/

Monday, 16 October 2017

Crowdcube, Little Brew, less beer, and the tale of the open company and closed brewery.


Little Brew raised £109k on Crowdcube in 2013. Crowdcube decsribed it as 'Little Brewery with Big Plans'. They were wrong.


This a classic tale of Crowdcube's incompetence. We had this comment from a Little Brew shareholder - 

Little Brew are a disgrace - it's been over 6 months since the founder emailed shareholders saying that he had sold all of their equipment and that the only realistic outcome "may" be to wind up the company. That's more than enough time to either create a plan for the business, or announce a wind up. Instead we have no news, and investors cannot claim tax relief. He says that he takes investors' money seriously, yet he is happy to deny them loss relief through silence. 

Crowdcube, as you would expect, have been utterly useless. They should just send an intern up to have a chat to him (surely they have his home address??) - a cheap way to keep credibility. Instead they just try emailing him at an account that has been closed. 

Little Brew are now 17 months overdue with their accounts and other filings. As you can read above, they seem unlikely to be making any revenue again. The brewery has been closed in all but name for at least a year but CC SHs are unable to claim their loss relief because there is some reason the company hasnt actually been closed. CC are either unwilling or unable to find out why. Its a zero service game for the people who trusted Crowdcube to pitch them a reasonable business. 

As with so many of Crowdcube's businesses, it is no the fact that they have failed but the way they have failed and the total incompetence of Crowdcube to offer shareholders any help. Read through our posts and it is by far the most common theme. 

It will continue until the only people who can do something, do something. Hello the FCA - which should really stand for Failing to Correct Anything.   


Sunday, 15 October 2017

Jam Vehicles eventually provide accounts -



Crowdcube funded Jam Vehicles have now filed accounts for YE April 16, just a few months before the 2017 ones are due. 


These accounts show losses of £200k, little cash, negative CA and a BS that is £240k in the red. Around £430k has been raised since in equity finance. 

According to their KS campaign no bikes have been delivered yet, despite various promises and updates. The estimated delivery date for the bikes these people bought was April 2015.

Are we yet again seeing Crowdcube funding being used to fill the hole left by KS creditors - ie unfulfilled orders. You would think that at some stage people will learn that this is not a great idea as an investment. 

Judgement reserved until the next accounts arrive in January 2018 - if they do. The good news for CC investors is that the paper value from the last funding puts the company at around £2.2m, so well ahead of the CC campaign's £700k. They just need to provide a bike or two. 

Square Pie and the mystery of the Disappearing Restaurants

When Square Pie managed to get £650k off 324 Crowdcube punters for their 4 year mini bond in September 2015, they promised mass openings. Now in October 2017, they have fewer restaurants than two years ago.


We have given these guys some previous coverage - here

The original target for the bond was £2m but that soon looked untenable so they reduced it to £450k. That was a dumb idea. Then they had 6 restaurants in London, now they have only 3. Plus one in Birmingham.

In lieu of restaurants, they have teamed up with Vue - the cinema operators - to offer a pie selection to film goers. They have one Vue in London and one in Bristol. 

The last accounts to YE Dec 16 will not have thrilled SHs - a loss of around £300k against a projected profit of £75k. It is hardly surprising given the change in company's core strategy. 3 of the London restaurants from 2015 have now closed - which strikes us as very odd considering what the Crowdcube pitch said about them. The 2015 pitch showed the company operating 12 restaurants by YE 2016 - with 20 by the end of this year. 

So now they have joined The Eden Project and Riverside to see who can be the first Crowdcube mini bond funded company to fail to repay investors. Square Pie have little cash and now new investment this year. Their reviews remain poor. I wouldnt bet against them.  

Vrumi lose their vavavoom as Venrex zero them.


Vrumi raised just shy of £1m on Seedrs in 2015. Now along with their VC backers Venrex, they have valued themselves at zero as they try to find a way to work their market.

It's not the end but must be close. Vrumi are in the now rather overcrowded shared space market - they were the self proclaimed Airbnb of the work place. Their plans have failed to create the demand that they predicted, so in a move that must be a first in ECF, they have sent SHs an email stating that they have valued themselves at zero, after receiving the same figure from Venrex.

In 2015 they were valued at £3.5m pre money  - so £4.5m post. Why the company has felt it sensible or necessary to follow the Venrex valuation is not explained. It's not very encouraging for the Seedrs shareholders who were told in the pitch that the company had an 'exceptionally strong' management team. One assumes that cash has run out, targets have been missed and Venrex declined to back another round. 

It sounds like another sad ending - one to be shared amongst you all.


Friday, 13 October 2017

1Rebel raise another £6.6m in a downround for another go at expansion



In a great sleight of hand, old Crowdcube darlings, 1Rebel, have raised £6.6m to do what they stated they would do with their Crowdcube 2015 £2.9m jackpot. Open gyms.


1Rebel originally took £1.5m off Crowdcube members in 2014 - to open gyms. By the end of 2015, they had opened two and came back for more cash - with the plan that they would open another 8 (2pa) over the next 4 years. This got them a round of applause and another £2.9m.

Now in October 2017, they still have just two units but have convinced backers at Codex Capital that they need another £6.6m to open the gyms they havent yet opened. This new deal was not in the plans and will leave CC investors seriously diluted. The £6.6m has been taken in at a valuation of £10m  - so below the 2015 CC round. Shareholders first learnt of this 'progress' via an article in CityAM. Following this, management sent a SH letter out. The question still remains  - have all shareholders been diluted equally? James Jack, the Chairman, has assured all CC SHs that the Board approved the down round and that these new SHs are serious business players who will help propel Rebel on to success. He didnt ask them though.

In all the previous SH updates, Rebel referred to the need for new debt finance - not equity. Using the much abused EBITDA profit gambit, they hoped to be able to borrow. Clearly this didnt happen as required. EBITDA was been hammered as a cash generating indicator post the Tech bubble crash. We could have told them that.

Of course it goes without saying that they have missed all of their Crowdcube targets and that this £6.6m was not in the plans.

This latest round of funding prevents them from closing but it also hugely dilutes the people who took the risk in 2014 and 2015 on promises that have failed to materialise.

Where has the 2015 money gone? No new units were opened which would have soaked it up - that is what it was for after all. They have delayed their accounts, so we will just have wait till Christmas to find out. Our guess is that the original model was not right and we have Rebel admitting as much to SHs. Then a couple of left field ideas wasted time and money. They were running to just stand still with loses in 2015 of £1.7m - more than twice the projected figure, which was in fact mainly historic.
 
Maybe that's what they mean by burning the fat?

Perhaps now with the metrics pointing in the right direction they have a chance - which is more than you would guess CC shareholders have.

As a footnote, we wonder if this down round will be featured by Crowdcube in their 'valuation' game that they publish every year? Somehow we doubt it.

Thursday, 12 October 2017

Government response to ECF regulation query


As expected, our Government have run for cover when it comes to answering any detailed queries about the lack of proper regulation in the equity crowdfunding sector.


Stephen Barclay MP is Economic Secretary to the Treasury. He stated in a reply to a query on the matter, that ECF is regulated by the FCA - as if this was news. He made no mention of what this meant but continued that  - 

''The Government has implemented a regulatory regime that is robust and proportionate......'' 

As we all know this is total nonsense. The FCA do what you tell them Stephen and as you are not telling them anything that is exactly what they are doing. 

He goes on to raise the vital issue but spectacularly manages to miss the nail and hit his thumb. The issue is that ECF is new and that the FCA have no experience or expertise or Government advice on how to treat it - because it is new. Its all part of the new age with new technologies and the old system cannot cope with it. The best he can offer is that the ECF platforms are supposed to regulate offers so that they are clear and fair. 

Thank you, Stephen.

It is a lengthy answer which says absolutely nothing and addresses none of the real issues. That presumably is why he has been given his job.

He might of course have a few other pressing matters stuck to his desk. Meanwhile the ECF mess continues to build.

Pass the fudge. 



Crowdcube funded companies queuing up to close



21 Crowdcube funded companies are currently late filing accounts and with one recent, new closure, it seems many of these will go the same way. 


HMRC give you nine months to prepare company accounts so filing late is simply a sign of very poor management or something worse. All of these 21 will be preparing accounts for a small co, so its a very simple spreadsheet version. 

Peach Lettings were dissolved this week; another Crowdcube success, hitting the stone wall with a large smack. They never filed accounts or did anything apart from help themselves to other people's money. We contacted them but got nowhere. 

Little Brew is now over 12 months late filing and has been in and out of striking off so many times we have lost count. Jam Vehicles is the same. 

The queue is growing as October rumbles on. 

Wednesday, 11 October 2017

What Crowdfunder dont tell you in their new Crowdcube pitch



Crowdfunder is back on Crowdcube - seeking £750k for 4.27%. Reading the pitch you would be forgiven for thinking that it is on track for their 2015 projections. 


Back in 2015/16, when they took over £1.3m off Crowdcube punters, they showed £3.99m revenues.

Now the new Crowdcube pitch states that the company are on track for a turnover of £2.2m for 2017 - so well off the £3.99m. This new raise was not part of the 15/16 plans.  

This doesnt mean they wont go on to succeed - just that some of the figures being banded about are misleading. The 2015 (historic) revenues were given by CC as £909k. It now turns out this figure was in fact only £800k. These anomalies are hardly surprising seeing that Crowdcube's Darren Westlake is on their board.

All of this could so easily be avoided if CC would just do a direct comparison. But then that would lead to people asking  - so if they missed these targets by that much why has the valuation gone up by so much. To which they would answer - well look at our future figures. To which any sensible investor would come back with - well the last time you told us this, your figures were out by a rather a long way. 

Tuesday, 10 October 2017

Monetaflex call it a day - a bad one.



Monetaflex took £169k off Crowdcube punters in 2015. Now that money is gone they have decided to call it a day.

Look - we dont make this stuff up. Crowdcube do.

The final communication from founders to their SHs, was the usual - we could have made it but things just went against us. Actually it was the usual poor idea even more poorly performed.

And the main point made by the founders to the 133 Crowdcube SHs, is that they will now be able to reclaim their tax. What does that say about the chances for UKplc?

A quick look at how a couple of Crowdcube bond issuers are doing - The Eden Project and River Cottage



Both the Eden Project and River Cottage raised money on Crowdcube via its mini bond offer. The former's bond is due for repayment in 12 months and River Cottage's in 2019. Neither has managed to get near to its projected success.


Reading through the Crowdcube prospectus for these two it is hard to believe that they are the same companies that now bear these names.

Eden borrowed £1.5m to purchase and develop two Grade II listed steadings. They showed considerable increases in revenues that have failed to materialise and the steadings remain undeveloped - 3 years later. No planning applications are currently listed as being live at the Council planning office, except for an advisory one. No permissions are outstanding.

An article in the Plymouth Herald from January 2017 questioned what was happening with the buildings as they had fallen in further disrepair since the purchase. Officially the reply was, the renovation was ongoing. We asked them how this could be so if no planning applications were currently live. They declined to reply. 

The same reply told us  - 

The Eden Project made a cash surplus from trading of more than £1.6 million in the last financial year, the fourth successive year of significant profit.
 
We asked what this meant, as they had posted a loss in the accounts for 2017 and 2016 and 2015...... Again they chose not to clarify but from looking over the accounts, this looks like a case of using EBITDA as a free cash flow declaration - something allowed by the UKs accounting system but since the dotcom crash, a fudge that is not generally thought to be best practice. Its debatable at least and as Warren Buffet said of it -

"Does management think the tooth fairy pays for capital expenditures?"  

After ITDA, Eden reported a small lose for 2017 - well around half a million. As the Eden project is intensely capital orientated, it seems sensible to include DA and the ensuing I from borrowings, in the real cash generated figure, especially if this results in a NP that is negative. One thing is for sure, the final declaration given here that they had four years of significant profits is not backed up by the filed accounts - EBITDA or no EBITDA. 

At any rate, revenues are way short of the anticipated numbers used to sell the bond. Sure the bond will get repaid but will it come from free cash flow? They seemed very defensive when we approached them and repeatedly told us that any statements inferring this or that, would be considered 'wrong and damaging'. Sad really. We only want to get at the truth.

River Cottage borrowed £1m to roll out more of their canteens. They now have fewer canteens than they did during the pitch, having closed their largest one in Plymouth this year. How much did that cost - reports show that they did a midnight raid on the day they closed to remove the F&F! 

According to a statement from the management it had always been a poor performer - although it was described as a roaring success in the bond pitch. Again the numbers are a long way off those suggested in the pitch documents. 

Where does this leave us?

Well both companies will surely repay their loans, even if it means raising their borrowings - the PR fallout would be too damaging and they are both nationally known and loved brands. But it yet again illustrates the futile job Crowdcube do in checking these numbers before using their FCA regulated platform to promote them.   

Monday, 9 October 2017

Just like we have been saying all along - Beeline on Dragons Den proves our point!



Last night, one of the Golden Boys of Seedrs successful pitches stable, got a roasting from the BBC Dragons. Beeline entered the Den with high hopes of attracting £100k for 2.5%. They left with rear ends smoking.


All of the Dragons' points about the cycling gadget made perfect sense to us. A gadget that doesnt really do much, certainly not cutting edge and will most likely be irrelevant in a year's time. More than £500k burnt so far with little knowledge as to where it has gone. A future raise with dilution anticipated within 6 months. A ludicrous valuation which gives future investors little hope of a return. 

The Beeline boys' hands tied by their SH and previous valuations. In fact the boys seemed incredibly clueless to us, although that may have been the pressure of the Den. They were far from convincing.

The most positive thing that was said about the pitch was that the packaging was nice. Thanks Deborah. We are not big fans of DD - telly at its worst most of the time. For once they were spot on. 

We see all of the above daily and investors still invest. When will they learn?   

Thursday, 5 October 2017

Easy Property does a deal with








Easy Property or Eprop raised over £1.3m on Crowdcube in 2014, valuing the company at over £60m. They then got themselves into a right mess and have now relaunched having done a deal with GPEA. The business model is now B2B2C as opposed to B2C. 


It's unclear what the exact deal entails but the company recently replaced most of its management team and from figures at CH, raised around £16m in an equity deal with GPEA, which massively dilutes CC shareholders and is technically a Big Dipper of a downround.

Still the good news is, at least they are still going. Where we go from here is anyone's guess. 

Please fasten your seat belts for take off and good luck.